... providing management accounting information is to help managers make more informed decisions There are broadly four areas where managers use information concerning the full cost of the business s ... output decisions Having full cost information can help managers to make decisions on the price to be charged to customers for the business s products or services Linked to the pricing decisions ... singleproduct business and then consider how it is done for a multi-product one Single-product businesses The simplest case for which to deduce the full cost per unit is where the business has...

... budgeted overheads for next year, analysed between the two cost centres This should be in the form of three columns: one for the total figure for each type of overhead and one column each for the two ... within a business We can see from Figure 4.8 that 86 per cent of businesses surveyed had or more cost centres and that 36 per cent of businesses had more than 20 cost centres Only per cent of businesses ... (that is, there was a business- wide or overall overhead rate used) Clearly, businesses that deal with overheads on a businesswide basis are very rare Source: Based on information taken from Drury,...

... cater for a range of products and no single product decision will cause the business to amend it Required: (a) Prepare a summary of information that would help with the pricing decision for the ... manufacturing businesses The business is about to commence production of a new model of machine for which facilities exist to produce a maximum of 10 machines each week To assist management in a decision ... on experience over recent years, in the forthcoming year the business expects to make and sell 40,000 Basics and 10,000 Supers Recently, the business s management accountant has undertaken an...

... 218 ACCOUNTING FOR CONTROL Budgeting for control In Chapter 6, we saw that budgets provide a useful basis for exercising control over a business Control involves making events conform to a plan ... and therefore working towards achieving the objectives of the business (We should remember that budgets are the short-term plans for achieving the business s objectives.) This enables a management- by-exception ... We shall continue to use the May ﬁgures for explaining the variances Note that the business had budgeted for a higher level of output for June than it did for May Activity 7.4 Output (production...

... £15,000) Net saving before depreciation Net saving before depreciation Net saving before depreciation Net saving before depreciation Net saving before depreciation Net saving before depreciation ... vans Net saving before depreciation Net saving before depreciation Net saving before depreciation Net saving before depreciation Net saving before depreciation Net saving before depreciation ... performed in line with earlier expectations The results, broken down according to business size, are set out below Underperformed Performed as expected Overperformed Large % 82 10 Size of business...

... vans Net saving before depreciation Net saving before depreciation Net saving before depreciation Net saving before depreciation Net saving before depreciation Net saving before depreciation ... of forecasts The forecasts made by the business should be examined carefully Inaccuracies in the forecasts or any underlying assumptions may change the expected outcomes (d) The NPV of the decision ... (instead of as a percentage) We have already seen how this works for the £20,000 inﬂow for year for the Billingsgate project For year the calculation would be: PV of year cash ﬂow (that is, £40,000)...

... strategic decision making What is strategic management accounting? Strategic management accounting is concerned with providing information that will support the strategic plans and decisions ... identiﬁed in Step 3) and formulating long- and short-term plans to pursue them Reviewing business performance and exercising control by assessing actual performance against planned performance (identiﬁed ... transform the performance of a business REAL WORLD 9.5 What a sauce FT Ahold is a major Dutch retailer that has recently been recovering its fortunes, under its chief executive Anders Moberg The business...

... expected to provide benefits for an infinite period The business has a per cent required rate of return for investors Required: Calculate the EVA® for the business for the third year of trading ... These are value drivers of the business that reﬂect key business decisions These decisions convert into free cash ﬂows and ﬁnally into shareholder value Any actions that management can take to l boost ... the business increased shareholder wealth during the year Although EVA® is used by many large businesses, both in the US and Europe, it tends to be used for management purposes only: few businesses...

... the business Activity 10.5 Which one of the three measures that we have discussed so far is most useful for evaluating the performance of divisional managers, and which for evaluating the performance ... Similar businesses within the same industry The performance of similar divisions of other businesses, or whole businesses operating within the same industry, may provide a useful basis for comparison ... another business, or a whole business entity? We may encounter a number of problems such as: l l l Obtaining the information required This is particularly true for a division within another business...

... providing a secure store for the inventories Clearly, the efficient management of inventories is an important issue for many businesses Source: Annual reports of the businesses for the financial year ... 6,500 UK businesses, 44 per cent of businesses leave it a fortnight, or longer, after the due date for payment before sending reminders to their credit customers, while 13 per cent leave it for a ... capital involvement for ﬁve very well-known UK businesses These businesses were randomly selected, except that each is high proﬁle and each is from a different industry For each business the major...

... helpful for those involved with pricing decisions to have some feel for the elasticity of demand of the commodity that will be the subject of a decision The sensitivity of the demand to the decision ... Ticket revenue at 50 per cent capacity for 20 performances: (£16,400 × 50% × 20) £164,000 Touring company ticket sales: Total revenue for each performance for a full house: £ 200 @ £22 = 4,400 ... problems of the business The budgeted income statement reveals a very low net proﬁt for the period For every £1 of sales revenue, the business is only managing to generate 0.4p in proﬁt The business...